What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-03 compared with 2023-05-02 · 173 added, 74 removed, 184 unchanged (57% of the section changed)

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See “Item 1 A.

– Risk Factors” in our 2022 Annual Report for a discussion of certain risks, uncertainties and assumptions associated with these statements.

– Risk Factors” in our 2022 Annual Report and “Item 1 A.

– Risk Factors” in this Quarterly Report for a discussion of certain risks, uncertainties and assumptions associated with these statements.

This MD&A is divided into the following sections:

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● Critical Accounting Policies and Estimates

GAAP Financial Measures

All dollar amounts are in USD thousands except share amounts and per share data and as otherwise noted.

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By building partnerships and strategically deploying capital, we seek to grow the business and enter into attractive verticals and associated businesses.

Throughout 2022, and during the first three months of 2023, we continued to make progress in achieving our strategic goals, including a 12% increase in our agent count, going from 78,196 agents as of March 31, 2022 to 87,327 agents

as of March 31, 2023.

Throughout 2022, and during the first six months of 2023, we continued to make progress in achieving our strategic goals, including a 7% increase in our agent count, going from 82,856 agents as of June 30, 2022 to 88,248 agents as of June 30, 2023.

The increase in our agents occurred even though, according to the National Association of Realtors (“NAR”), real estate industry agents declined 1.1% from June 2022 to June 2023.

The expected outcome of these activities will be to better position us to deliver on our full potential, to provide a platform for future growth opportunities, and to achieve our long-term financial goals.

MARKET CONDITIONS AND INDUSTRY TRENDS

In March of 2023, the existing home sales market declined 22%, compared to March of 2022 according to the National Association of Realtors (“NAR”).

In June of 2023, the existing home sales market declined 18.9%, compared to June of 2022 according to the NAR.

Due to the increasing interest rates and increasing inflation, the market began a contraction trend in the second quarter of 2022.

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According to NAR, inventory of existing homes for sale in the U.S.

was 980,000 as of March 2023 (preliminary) compared to 930,000 at the end of March 2022.

was 1,080,000 as of June 2023 (preliminary) compared to 1,250,000 at the end of June 2022.

Mortgage Interest Rates

The sharp increase in mortgage rates have continued to negatively impact the demand for homebuying.

Based on Freddie Mac data, the average rate for a 30-year, conventional, fixed rate mortgage was 6.3% in March 2023 vs 4.7% in March 2022.

Based on Freddie Mac data, the average rate for a 30-year, conventional, fixed rate mortgage was 6.7% in June 2023 vs 5.7% in June 2022.

Housing Affordability Index

According to NAR, the composite housing affordability index decreased to 103.9 for February 2023 (preliminary) from 129.4 for February 2022.

According to NAR, the composite housing affordability index decreased to 93.8 for May 2023 (preliminary) from 98.3 for May 2022.

When the index is above 100, it indicates that a family earning the median income has sufficient income to purchase a median-priced home, assuming a 20% down payment and ability to qualify for a mortgage.

The favorable housing affordability index has been declining year over year due to increasing mortgage rates.

The housing affordability index has been declining year over year due to increasing mortgage rates.

Existing Home Sales Transactions and Prices

According to NAR, seasonally adjusted existing home sale transactions decreased to an annual rate of 4.4 million in March 2023 (preliminary) compared to 5.7 million in March 2022.

According to NAR, the nationwide existing home sales median price for March of 2023 (preliminary) was $375,700 compared to $379,300 in March 2022, a decline of 0.9%.

According to NAR, seasonally adjusted existing home sale transactions decreased to an annual rate of 4.2 million in June 2023 (preliminary) compared to 5.1 million in June 2022 a decrease of 18.9%.

According to NAR, the nationwide existing home sales median price for June of 2023 (preliminary) was $410,200 compared to $413,800 in June 2022, a decline of 0.9%.

Housing inventory was also up to 3.1 months of inventory compared to 2.9 months last year.

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The following table outlines the key business metrics that we periodically review:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands, except transactions and agent count)

Real estate sales transactions

Other real estate transactions

Gross margin (%)

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Our strength is attracting real estate agent and broker professionals that contribute to our growth.

Brokerage real estate transactions are recorded when our agents and brokers represent buyers and/or sellers in the purchase or sale, respectively, of a home.

Real estate sales transactions are recorded when our agents and brokers represent buyers and/or sellers in the purchase or sale, respectively, of a home.

Other real estate transactions are recorded for leases, rentals and referrals.

The number of real estate transactions is a key driver of our revenue and profitability.

Real estate transaction volume represents the total sales value for all homes sold by our agents and brokers and is influenced by several market factors, including, but not limited to, the pricing and quality of our services and market conditions that affect home sales, such as macroeconomic factors, local inventory levels, mortgage interest rates, and seasonality.

Transaction volume represents the total sales value for all transactions and is influenced by several market factors, including, but not limited to, the pricing and quality of our services and market conditions that affect home sales, such as macroeconomic factors, local inventory levels, mortgage interest rates, and seasonality.

Real estate transaction revenue represents the commission revenue earned by the Company for closed brokerage real estate transactions.

We continue to increase our agents and brokers significantly in the United States and Canada through the execution of our growth strategies.

We continue to increase our agents and brokers in the United States, Canada, and certain international locations through the execution of our growth strategies.

The rate of growth of our agent and broker base is difficult to predict and is subject to many factors outside of our control, including macroeconomic factors affecting the real estate industry in general.

With our unique business model, we anticipate being able to continue to grow for the remainder of the year, despite the less favorable economic outlook.

Settled home sales transactions and volume resulted from closed real estate transactions and typically change directionally with changes in the market’s existing home sales transactions as reported by NAR, as disproportionate variances are representative of company-specific improvements or shortfalls to the norm.

Settled home sales transactions and volume result from closed real estate transactions and typically change directionally with changes in the market’s existing home sales transactions as reported by NAR, as disproportionate variances are representative of company-specific improvements or shortfalls to the norm.

Our home sale transaction performance was directly related to the performance of our agent base over the prior comparative period.

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Gross profit is based on the information provided in our results of operations or our consolidated statements of comprehensive income and is an important measure of our potential profitability and brokerage performance.

For the three months ended March 31, 2023 and 2022 gross profit was $73.1 million, and $83.5 million, respectively.

For the three months ended March 31, 2023, and 2022, gross margin was 8.6% and 8.3%, respectively.

Gross profit in the first quarter of 2023 reflects lower revenue related to the slowdown in the housing market in early 2023.

However, for the three months ended March 31, 2023, gross margin increased year-over-year primarily due to a lower increase in commissions and agent-related costs due to a lower percentage of agents reaching their commission capping requirements, entitling them to a lower percentage of the home sale commission.

For the three months ended June 30, 2023 and 2022 gross profit was $96.5 million, and $107.3 million, respectively.

For the three months ended June 30, 2023 and 2022, gross margin was 7.8% and 7.6%, respectively.

For the six months ended June 30, 2023 and 2022, gross profit was $169.6 million, and $190.7 million, respectively.

For the six months ended June 30, 2023 and 2022, gross margin was 8.1% and 7.9%, respectively.

Gross profit decreased in the first six months of 2023 compared to 2022 due to lower revenue related to the slowdown in the housing market.

However, for the first half of 2023 and for the three months ended June 30, 2023, gross margin increased year-over-year primarily due to a lower increase in commissions and agent-related costs due to a lower percentage of agents reaching their commission capping requirements, entitling them to a lower percentage of the home sale commission.

Management also reviews Adjusted EBITDA, which is a non-U.S.

GAAP financial measure, to understand and evaluate our core operating performance.

Adjusted EBITDA has declined for the three months ended March 31, 2023 ended compared to the same period in 2022 due to lower revenue partially offset by lower operating costs.

Adjusted EBITDA has declined for the first half of 2023 and for the three months ended June 30, 2023 compared to the same periods in 2022 due to lower revenue partially offset by lower operating costs.

Agent and Employee Experience

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An NPS above 50 is considered excellent.

The Company’s agent NPS was 70 in the first quarter of 2023.

The Company’s agent NPS was 72 in the second quarter of 2023.

The NPS measure is an important vehicle for delivering on our core value of transparency.

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RESULTS OF OPERATIONS

Three Months Ended March 31, 2023 compared to the Three Months Ended March 31, 2022

Three Months Ended June 30, 2023 compared to the Three Months Ended June 30, 2022

Three Months Ended

March 31, 2023

March 31, 2022

June 30, 2023

June 30, 2022

(In thousands, except share amounts and per share data)

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Total operating expenses

Operating (loss) income

Operating income

Other (income) expense

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Other (income) expense, net

(Loss) income before income tax expense

Income tax benefit

Net (loss) income

Income before income tax expense

Income tax expense

Net loss attributable to noncontrolling interest

Net (loss) income attributable to eXp World Holdings, Inc.

Net income attributable to eXp World Holdings, Inc.

Adjusted EBITDA (1)

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GAAP Financial Measures.”

First Quarter 2023 consolidated financial highlights as compared to the same year-ago quarter:

● Revenue decreased 16% to $850.6 million.

Three months ended June 30, 2023 consolidated financial highlights, including certain comparisons to the same year-ago quarter:

● Revenue decreased (13)% to $1.2 billion.

● Gross profit decreased (10)% to $96.5 million.

● Net income of $9.4 million.

Earnings per diluted share of $0.01 compared to earnings per diluted share of $0.06 in the year ago quarter.

Earnings per diluted share of $0.06 compared to earnings per diluted share of $0.06 in the same period of prior year.

● Adjusted EBITDA (a non-GAAP financial measure) of $24.7 million.

● As of March 31, 2023, cash and cash equivalents totaled $122.8 million.

The company repurchased approximately $29.9 million of common stock during the first quarter of 2023.

● The Company paid a cash dividend for the first quarter of 2022 of $0.045 per share of common stock on March 31, 2023.

On April 27, 2023, the Company’s Board of Directors declared a cash dividend of $0.045 per share of common stock for the second quarter of 2023, expected to be paid on May 31, 2023 to stockholders of record on May 12, 2023

Our total revenues were $850.6 million for the three months ended March 31, 2023 compared to $1,010.7 million for the same period in 2022, a decrease of ($160.1) million, or (16)%.

Total revenues decreased in the first quarter of 2023 as a result of a decrease in real estate transactions and home prices compared to the same period in 2022 due to the decline of the US and Canada residential real estate market.

● As of June 30, 2023, cash and cash equivalents totaled $124.7 million.

The company repurchased $48.8 million of common stock during the second quarter of 2023.

● The Company paid a cash dividend for the second quarter of 2023 of $0.045 per share of common stock on May 31, 2023.

On July 28, 2023, the Company’s Board of Directors declared a cash dividend of $0.05 per share of common stock for the third quarter of 2023, expected to be paid on September 4, 2023 to stockholders of record on August 18, 2023.

Our total revenues were $1.2 billion for the three months ended June 30, 2023 compared to $1.4 billion for the same period in 2022, a decrease of ($182.1) million, or (13)%.

Total revenues decreased in the second quarter of 2023 as a result of a decrease in real estate transactions and home prices compared to the same period in 2022 primarily due to the continued decline of the US and Canada residential real estate market.

Commission and Other Agent-Related Costs

Commission and other agent-related costs were $777.6 million for the three months ended March 31, 2023 compared to $927.3 million for the same period in 2022, a decrease ($149.7) million, or (16)%.

Commissions and other agent-related costs decreased as a result of a decrease in real estate transactions and home prices compared to the three months ended March 31, 2022 due to the decline of the U.S.

Commission and other agent-related costs were $1.1 billion for the three months ended June 30, 2023 compared to $1.3 billion for the same period in 2022, a decrease of ($171.4) million, or (13)%.

Commissions and other agent-related costs decreased primarily as a result of a decrease in real estate transactions and home prices compared to the three months ended June 30, 2022 due to the continued decline of the U.S.

and Canada residential real estate market.

General and Administrative Expense

General and administrative expenses were $71.8 million for the three months ended March 31, 2023 compared to $75.3 million for the same period in 2022, a decrease of ($3.6) million or (5)%.

General and administrative expenses include costs related to wages, including stock compensation, and other general overhead expenses.

General and administrative expenses were $82.5 million for the three months ended June 30, 2023 compared to $91.4 million for the same period in 2022, a decrease of ($8.9) million or (10)%.

General and administrative expenses include costs related to wages, stock compensation, and other general overhead expenses.

General and administrative expenses decreased as a result of lower stock-based compensation.

Sales and Marketing

Sales and marketing expenses decreased to $2.9 million for the three months ended June 30, 2023 compared to $4.2 million the same period in 2022.

The decrease of ($1.3) million is due to decreased advertising to offset the contraction in the real estate market.

Other (Income) Expense

Other (income) in the second quarter of 2023 relates primarily to increased interest income when compared to the second quarter of 2022.

Income Tax Expense (Benefit)

The Company’s provision for income tax expense amounted to $2.8 million and $1.7 million for the three months ended June 30, 2023 and 2022, respectively, which represented effective tax rates of positive 23.20% and 15.16%, respectively.

The provision for income tax expense was primarily attributable to increase in income from operations, lower deductible stock-based compensation windfalls and return to provision true-ups in various jurisdictions.

The Company is subject to a wide variety of tax laws and regulations across the jurisdictions where it operates.

Regulatory developments from the U.S.

or international tax reform legislation could result in an impact to the Company's effective tax rate.

The company continues to monitor the Base Erosion and Profit Shifting (BEPS) Integrated Framework provided by the Organization for Economic Co-operation and Development (OECD) including the legislative adoption of Pillar II by countries, and all other tax regulatory changes, to evaluate the potential impact on future periods.

Six Months Ended June 30, 2023 compared to the Six Months Ended June 30, 2022

Six Months Ended

June 30, 2023

June 30, 2022

(In thousands, except share amounts and per share data)

Statement of Operations Data:

Operating expenses

Commissions and other agent-related costs

General and administrative expenses

Sales and marketing expenses

Total operating expenses

Operating income

Other (income) expense

Other (income) expense, net

Equity in losses of unconsolidated affiliates

Total other (income) expense, net

Income before income tax expense

Income tax (benefit) expense

Net loss attributable to noncontrolling interest

Net income attributable to eXp World Holdings, Inc.

Adjusted EBITDA (1)

Earnings per share

Weighted average shares outstanding

(1) Adjusted EBITDA is not a measurement of our financial performance under U.S.

GAAP and should not be considered as an alternative to net income, operating income or any other measures derived in accordance with U.S.

For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, see “Non-U.S.

GAAP Financial Measures.”

Six months ended June 30, 2023 consolidated financial highlights, including certain comparisons to the same year-ago period:

● Revenue decreased (14)% to $2.1 billion.

● Gross profit decreased (11)% to $169.6 million.

● Net income of $10.9 million.

Earnings per diluted share of $0.07 compared to earnings per diluted share of $0.12 in the same period of prior year.

● Adjusted EBITDA (a non-GAAP financial measure) of $38.1 million.

● As of June 30, 2023, cash and cash equivalents totaled $124.7 million.

The company repurchased approximately $78.7 million of common stock during the first half of 2023.

● The Company paid cash dividends for the first six months of 2023 of $0.045 per share of common stock on March 31, 2023 and $0.045 per share of common stock on May 31, 2023.

Our total revenues were $2.1 billion for the six months ended June 30, 2023 compared to $2.4 billion for the same period in 2022, a decrease of ($342.2) million, or (14)%.

Total revenues decreased in the first half of 2023 primarily as a result of a decrease in real estate transactions and home prices compared to the same period in 2022 primarily due to the decline of the US and Canada residential real estate market.

Commission and Other Agent-Related Costs

Commission and other agent-related costs were $1.9 billion for six months ended June 30, 2023 compared to $2.2 billion for the same period in 2022, a decrease of ($321.1) million, or (14)%.

Commissions and other agent-related costs decreased primarily as a result of a decrease in real estate transactions and home prices compared to the period ended June 30, 2022 due to the decline of the U.S.

and Canada residential real estate market.

General and Administrative Expense

General and administrative expenses were $154.3 million for the six months ended June 30, 2023 compared to $166.7 million for the same period in 2022, a decrease of ($12.4) million or (7)%.

General and administrative expenses include costs related to wages, stock compensation, and other general overhead expenses.

General and administrative expenses decreased as a result of lower stock-based compensation, partially offset by increased personnel expenses due to the Company’s increase in employee count to continue to support our agent growth strategy.

Sales and Marketing

Sales and marketing expenses decreased to $3.0 million for the three months ended March 31, 2023 compared to $3.7 million the same period in 2022.

Sales and marketing expenses decreased to $5.8 million for the six months ended June 30, 2023 compared to $7.9 million the same period in 2022.

The decrease of ($2.1) million is due to decreased advertising to offset the contraction in the real estate market.

Other (Income) Expense

Other (income) in the first quarter of 2023 relates primarily to increased interest income when compared to the first quarter of 2022.

Income Tax Benefit

The Company’s provision for (benefit from) income taxes amounted to ($2.59) million and ($5.15) million for the three months ended March 31, 2023 and 2022, respectively, which represented effective tax rates of positive 237.56% and negative 137.97%, respectively.

The increase in income tax benefit was primarily attributable to lower deductible stock-based compensation windfalls.

Other (income) in the first half of 2023 relates primarily to increased interest income when compared to the first half of 2022.

Income Tax (Benefit) Expense

The Company’s provision for income tax expense and (benefit from) income taxes amounted to $0.2 million and ($3.5) million for the six months ended June 30, 2023 and 2022, respectively, which represent an effective tax rate of positive 2.20% and negative 23.81%, respectively.

The Company is subject to a wide variety of tax laws and regulations across the jurisdictions where it operates.

Regulatory developments from the U.S.

or international tax reform legislation could result in an impact to the Company's effective tax rate.

BUSINESS SEGMENT DISCLOSURES

See Note 11 – Segment Information to the consolidated financial statements for additional information regarding our business segments.

The following table reflects the results of each of our reportable segments during the three months ended March 31, 2023 and 2022:

The following table reflects the results of each of our reportable segments during the three months ended June 30, 2023 and 2022:

Three Months Ended

March 31, 2023

March 31, 2022

June 30, 2023

June 30, 2022

(In thousands, except share amounts and per share data)

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Total Reported Adjusted EBITDA

North American Realty revenue decreased 16% in the first quarter of 2023 compared to the same period in 2022 primarily due to decreased real estate transactions and home prices driven by the slowdown in the real estate markets.

North American Realty revenues decreased (13)% in the second quarter of 2023 compared to the same period in 2022 primarily due to decreased real estate transactions and home prices driven by the slowdown in the real estate markets.

Adjusted EBITDA decreased (14)% due to lower revenue, as well as increased general and administrative costs.

International Realty revenues increased 35% in the second quarter of 2023 compared to the same period in 2022 primarily due to increased real estate transactions driven by increased production in previously launched markets.

Adjusted EBITDA decreased (25)% in the second of 2023 compared to the same period in 2022 due to growing selling, general and administrative expenses to support the incremental production in existing operations.

Virbela revenues decreased (11)% due to softer customer demands in one-time virtual events.

Adjusted EBITDA improved 56% primarily due to workforce reductions and decrease in marketing and advertising expenses.

Other Affiliated Services revenues were relatively flat due to consistent business operations.

Adjusted EBITDA decreased (56)% due to increases in selling, general and administrative expenses related to adjusting business initiatives.

Corporate expenses and other contain the costs incurred to operate the corporate parent of eXp Realty.

The decrease in these costs (improved Adjusted EBITDA of 50% in the second quarter of 2023 compared to the same period of 2022) reflect decreased costs primarily due to cost containment initiatives.

See Note 11 – Segment Information to the consolidated financial statements for additional information regarding our business segments.

The following table reflects the results of each of our reportable segments during the six months ended June 30, 2023 and 2022:

Six Months Ended

June 30, 2023

June 30, 2022

(In thousands, except share amounts and per share data)

Statement of Operations Data:

North American Realty

International Realty

Other Affiliated Services

Segment eliminations

Total Consolidated Revenues

Adjusted Segment EBITDA (1)

North American Realty

International Realty

Other Affiliated Services

Corporate expenses and other

Total Reported Adjusted EBITDA

North American Realty revenues decreased (15)% in the first half of 2023 compared to the same period in 2022 primarily due to decreased real estate transactions and home prices driven by the slowdown in the real estate markets.

Adjusted EBITDA decreased (19)% due to lower revenue, as well as increased general and administrative costs primarily related to increased compensation and personnel related expenses.

International Realty revenue increased 52% in the first quarter of 2023 compared to the same period in 2022 primarily due to increased real estate transactions driven by a higher agent count and increased productivity in previously launched markets.

Adjusted EBITDA (loss) increased 88% in the first quarter of 2022 compared to the same period in 2022 due to growing selling, general and administrative expenses to support the incremental production in existing operations.

Virbela revenue increased 19% due to additional enterprise customer base.

Adjusted EBITDA (loss) decreased 53% primarily due to workforce reductions and decrease in marketing and advertising expenses.

Other Affiliated Services revenue increased 100% due to expansion of SUCCESS® Coaching and SUCCESS® Media, primarily SUCCESS® magazine.

The increases in revenue directly contributed to Adjusted EBITDA (loss) decrease of 18%.

International Realty revenues increased 42% in the first half of 2023 compared to the same period in 2022 primarily due to increased real estate transactions driven by increased production in previously launched markets.

Adjusted EBITDA decreased (50)% in the first half of 2023 compared to the same period in 2022 due to growing selling, general and administrative expenses to support the incremental production in existing operations.

Virbela revenues increased 3% due to increased customer contracts partially offset by a decrease in one-time virtual event revenue.

Adjusted EBITDA improved 55% primarily due to workforce reductions and decreases in marketing and advertising expenses.

Other Affiliated Services revenues increased 46% due to expansion of SUCCESS® Coaching and SUCCESS® Media, primarily SUCCESS® magazine.

Adjusted EBITDA decreased (17)% due to increased selling, general and administrative expenses to support the expansion.

Corporate expenses and other contain the costs incurred to operate the corporate parent of eXp Realty.

The decrease in these costs (decrease in Adjusted EBITDA (loss) of 60% in the first quarter of 2023 compared to the same period of 2022) reflect decreased costs primarily due to cost containment initiatives.

The decrease in these costs (improved Adjusted EBITDA of 54% in the first half of 2023 compared to the same period of 2022) reflect decreased costs primarily due to cost containment initiatives.

GAAP FINANCIAL MEASURES

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We define the non-U.S.

GAAP financial measure of Consolidated Adjusted EBITDA to mean net income, excluding other income (expense), income tax benefit (expense), depreciation, amortization, impairment charges, stock-based compensation expense and stock option expense.

GAAP financial measure of Consolidated Adjusted EBITDA to mean net income, excluding other income (expense), income tax benefit (expense), depreciation, amortization, impairment charges, stock-based

compensation expense and stock option expense.

Adjusted Segment EBITDA is defined as operating profit plus depreciation and amortization and stock-based compensation expenses.

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● Adjusted EBITDA excludes certain recurring, non-cash charges such as depreciation of fixed assets, amortization of intangible assets, and impairment charges related to these long-lived assets, and, although these are non-cash charges, the assets being depreciated, amortized, or impaired may have to be replaced in the future.

The following tables present a reconciliation of Adjusted EBITDA to net loss, the most comparable U.S.

The following tables present a reconciliation of Adjusted EBITDA to net income, the most comparable U.S.

GAAP financial measure, for each of the periods presented:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Other (income) expense, net

Income tax benefit

Income tax (benefit) expense

Depreciation and amortization

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Currently, our primary use of cash on hand is to sustain and grow our business operations, including, but not limited to, commission and revenue share payments to agents and brokers and cash outflows for operating expenses and dividend payments.

In addition, the Company has no known material cash requirements as of March 31, 2023, relating to capital expenditures, commitments, or human capital (except as passthrough commissions to agents and brokers concurrent with settled real estate transactions).

In addition, the Company has no known material cash requirements as of June 30, 2023, relating to capital expenditures, commitments, or human capital (except as passthrough commissions to agents and brokers concurrent with settled real estate transactions).

For information regarding the Company’s expected cash requirement related to settlement costs, see Note 10 – Commitments and Contingencies .

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Net working capital is calculated as the Company’s total current assets less its total current liabilities.

The following table presents our net working capital as of March 31, 2023 and December 31, 2022:

March 31, 2023

The following table presents our net working capital as of June 30, 2023 and December 31, 2022:

June 30, 2023

December 31, 2022

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Net working capital

For the three months ended March 31, 2023, net working capital increased $0.9 million, or 1%, compared to December 31, 2022.

The following table presents our cash flows for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

For the six months ended June 30, 2023, net working capital increased $4.1 million, or 3%, compared to December 31, 2022.

The following table presents our cash flows for the six months ended June 30, 2023 and 2022:

Six Months Ended June 30,

Cash provided by operating activities

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Net change in cash, cash equivalents and restricted cash

For the three months ended March 31, 2023, cash provided by operating activities decreased ($55.4) million compared to the same period in 2022.

For the six months ended June 30, 2023, cash provided by operating activities decreased ($11.1) million compared to the same period in 2022.

The change resulted primarily from decreased real estate transactions.

For the three months ended March 31, 2023, cash used in our investing activities decreased primarily due to fewer capital expenditures.

For the three months ended March 31, 2023, the increase in cash flows used in financing activities primarily were related to an increase in the payment of cash dividends from 2022 to 2023.

For the six months ended June 30, 2023, cash used in our investing increased primarily due to increased investments in unconsolidated affiliates, partially offset by fewer capital expenditures.

For the six months ended June 30, 2023 and 2022 cash flows used in financing activities primarily were related to stock repurchases and the payment of cash dividends.

While we do not consider acquisitions a critical element of our ongoing business, we seek opportunities to expand and enhance our portfolio of solutions, access new revenue streams, or otherwise complement or accelerate the growth of our existing operations .

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2022, which provides a

description of our critical accounting policies.

There were no changes to critical accounting policies or estimates as reflected in our 2022 Annual Report.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis